talking massive investment in new stores and remodels, not to mention yet-to-be-worked-out logistics in store and online. But we’re also talking massive convenience benefits for the
shopper and, for the savvy retailer, with a little luck, extreme customer loyalty bolstered
by an ever-growing selection of available-here-only store brands. And, make no mistake,
with Amazon kicking in, we’re talking sooner rather than later.
David Lummis is the lead pet-market analyst for Packaged Facts, a division of MarketResearch
.com, which recently published its annual U.S. Pet Market Outlook report ( packagedfacts.com).
BY FRED PARRISH
Each year, Gallup releases a report ex- amining how employee engagement affects key performance outcomes
across industries. Having engaged employees is a key to success for pet retailers and
other businesses. For example, actively disengaged employees drive away customers
and eat up a manager’s time and focus—
particularly when they inevitably have to
Employee turnover is a huge but often
overlooked expense for businesses of all
kinds and sizes. A study by the Center for
American Progress found that the average
cost to a company of turning over a highly
skilled job is 213 percent of the cost of one
year’s compensation for the position.
In addition to the direct cost of hiring
and training new staff, there’s also the financial impact of lost efficiency and the stress
on current employees during recruiting and
training. These include:
1. Staff Strain While the Position Is Unfilled: The process of recruiting and hiring
new staff can take weeks or even months.
Until it is finished, existing staff must provide support to complete tasks required of
the vacant position while meeting requirements of their own positions.
2. Learning Curve Effects on Profitability: The amount of time it takes the
new employee to get through the normal
learning curve can take weeks or months.
During that time, there is a tremendous gap
in productivity versus compensation and a
serious negative leverage working on the
profitability of the company.
3. Training Demands: Training new
employees has both direct and indirect effects on current staff. It directly reduces the
time available for existing staff members
who are training new recruits to respond
to normal operating issues. Plus, the need
to cover gaps in efficiency caused by the
learning curve of new employees indirectly affects the performance and morale of
other staff. Existing staff members might be
unable to complete their own tasks on time
while covering requirements of the newly
Each time these situations occur, it caus-
es significant stress on the organization.
And the smaller the company, the more
stress is felt. In smaller companies, having a
single position unfilled can have a dramatic
impact because there are not as many other
employees to fill the gap.
What’s the solution? Retailers should
give serious consideration to employee
retention and its relationship to overall
payroll costs. This is particularly true in
fast-growing sectors such as pet specialty
retail, where customer service is such a key
factor in success.
One way to do this is to make sure your
employees have adequate training to do
their jobs. Even though training can be time
consuming and expensive, it is important
to ensure that each employee is performing
at the highest level of efficiency and effec-
tiveness. A staff that is equipped with the
appropriate skills and
the necessary tools to
perform is essential to
the profitability of your
More extensive ex-
perience or better train-
ing results in a higher
level of performance.
This justifies a higher
pay rate for employees
(new hires or existing
staff) who are better
trained and more ex-
perienced. The overall
advantage of a superi-
or staff far exceeds the
premium paid in the
form of higher salary
and/or better benefits.
There are numerous
areas directly related to
that provide oppor-
tunities for improved
profits beyond the
relatively simple de-
cision regarding base
vary from company to
company, but at some
point, they must be
• Payroll is a major
area of management
focus for controlling
operating expenses in
most businesses. Managing staff efficiency
is crucial to the success of the organization.
• In addition to the obvious cost (
sala-ries), there are hidden costs that are not so
well understood and can add a significant
premium to the base number, such as payroll taxes, worker’s compensation insurance, group health and other benefits, etc.
• Avoiding overtime by managing the
effective use of available regular-time hours
can produce great returns. Pay attention to
scheduling and absenteeism to reduce the
need for extended hours for full-time staff.
• By managing staffing levels, you can
avoid the need to manage the details of
many associated costs while reaping the
same benefits on the bottom line.
Regardless of how many people your
business employs, if you have employees,
you will have to address these issues on
some level. Your decisions regarding train-
ing, staffing levels and compensation will
affect your company well into the future, so
it pays to think through the ramifications.
Get professional help where you need it and
follow the experts’ advice.
Fred Parrish is the founder and CEO of The
Profit Experts, a CFO service that helps small
business owners improve their profitability and
cash flow. He is also creator of The Profit Beacon, a new app that provides predictive analytics to help businesses make smart and timely
decisions. Parrish is also the author of “The
Profit Mentality.” For more information, visit
Employee turnover can cut into profits; however, with some preparation,
retailers can avoid being impacted before problems arise.
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